How to Qualify For Down Payment Assistance Programs

What is a Down Payment Assistance Program?

Down payment assistance programs help you cover the cost of a down payment. A down payment is the initial payment that you put up toward the cost of your home. In order to not be charged PMI, or private mortgage insurance, most people try to put 20% down on their home.

20% can be a lot of money! Some people choose to opt for things like FHA loans which allow you to put less down, but you will still have to pay PMI, which can drastically increase your monthly payment. With a down payment assistance program, you can reduce the amount of money you have to put down in a few different ways.

According to Mortgage Reports, there are four types of down payment assistance programs. First, there are grants, which never have to be repaid. Second, there are three different types of loans: regular loans which are paid monthly, deferred loans which are only paid when you move or sell your home, and forgivable loans, which are forgiven after a certain period of time if you do not sell, move, or refinance your home.

How to Qualify For Down Payment Assistance

There are numerous different ways that you can qualify for down payment assistance. There are some programs that can help first-time home buyers. Even if you are not a first time buyer, there are also down payment programs that you may qualify for if you haven’t owned a home in the past three years.

You may qualify other types of down payment assistance programs depending on your level of income. Many different locations have specific programs, so make sure you check out the different programs in your local area. The City of Los Angeles, for example, provides low income purchase assistance, moderate income purchase assistance, and first-time home buyer purchase assistance.

Down payment assistance varies all over the country, so make sure that you do your research to see what you can qualify for.

Conclusion

A down payment assistance program can help you afford to buy a home. Down payment assistance programs come in four types: grants, regular loans, forgivable loans, and deferred loans. Most down payment programs are meant to help out first time home buyers, but you may qualify for one depending on your income level or if you have not purchased or owned a home in the past three years.